Homeownership Rates Continue to Fall as Renter Rates Rise

The national vacancy rates for the second quarter of 2016 reported 1.7 percent for homeowner housing, according to an announcement from the Department of Commerce’s Census Bureau. The report states that the homeowner vacancy rate of 1.7 percent was not statistically different from the rate in the second quarter 2015 or the rate in the first quarter 2016.

The homeownership rate of 62.9 percent was reported to be 0.5 percentage points behind that of the second quarter 2015 rate of 63.4 percent. It was also 0.6 percentage points declined from the rate in the first quarter of 2016, 63.5 percent.

Additionally, the report noted that the second quarter of 2016 homeownership rates were highest in the Midwest at 67.7 percent and the rates were lowest in the Northeast with 59.2 percent and West with 57.9 percent. These rates were not statistically different from each other.

“The U.S. homeownership rate dropped to its lowest level since 1965, but the drop isn’t statistically significant from a year ago,” says Ralph McLaughlin, Chief Economist for Truila. “However, if the decline is real, it is more likely due to a large increase in the number of renter households than any real decline in the number of homeowner households.”

In addition to these finding, for the second quarter of 2016, the homeownership rates were highest for householders ages 65 years and over with 77.9 percent. In contrast, the lowest rates were for the under 35 years of age group with 34.1 percent. In regards to the rates for householders 55 to 64 years and 65 years and over, it was found that they were lower than the second quarter 2015 rates. On the other hand, the rates for householders under 35 years, 35 to 44 years and 45 to 54 years were not statistically different from those during the second quarter of 2015.

“While the Millennial homeownership rate continues to decline, it’s important to note that the decrease could be just as likely due to new renter household formation as it is their ability to buy homes,” says McLaughlin. “Certainly low inventory and affordability isn’t helping their efforts to own, but moving out of their parents’ basement and into a rental unit is also a good sign for the housing market.”

Approximately 87.3 percent of the housing units in the United States in the second quarter 2016 were occupied compared to the 12.7 percent that were vacant. Vacant year-round units accounted for 9.5 percent of the total housing units.

With 2.4 percent of the total units used for rent, the report found that 1.0 percent were for sale only and another 0.8 percent were rented or sold but not yet occupied. As well, vacant units that were held off market made up 5.4 percent of the total housing inventory. Of these subset, 1.5 percent were for occasional use, 1.1 percent were temporarily occupied by persons with usual residence elsewhere, and 2.8 percent were vacant for a variety of other reasons.

Kendall Baer is a Baylor University graduate with a degree in news editorial journalism and a minor in marketing. She is fluent in both English and Italian, and studied abroad in Florence, Italy. Apart from her work as a journalist, she has also managed professional associations such as Association of Corporate Counsel, Commercial Real Estate Women, American Immigration Lawyers Association, and Project Management Institute for Association Management Consultants in Houston, Texas. Born and raised in Texas, Baer now works as the online editor for DS News.